Universal basic income could alleviate the crisis as artificial intelligence leads to job losses

A basic income of ₡300,000 for everyone in the country would serve to eliminate extreme poverty
and reduce poverty, as well as improve health, innovation and the fulfilment of labour rights.
A monthly universal basic income (UBI) for everyone could be an alternative to the massive loss of
jobs due to the use of artificial intelligence to replace certain trades, while alleviating poverty and
improving the quality of life of the country’s inhabitants.

By Daniela Muñoz Solano

This is according to Andrej Badilla, political scientist, researcher at the Centro de Investigación en
Cultura y Desarrollo of the Universidad Estatal a Distancia and member of the Red por la Renta
Básica Universal de Costa Rica (Network for Universal Basic Income in Costa Rica).
Badilla spoke on the subject during the forum “Universal Basic Income: Challenges and
proposals”, organised by CICDE and the Network for Universal Basic Income in Costa Rica. Also
present were José Rafael Quesada, deputy mayor of Montes de Oca and specialist in Local
Economic Development; and Silvia Lara, former president of the Instituto Mixto de Ayuda Social
and former Minister of Work and Social Security.

During the event, which took place on Wednesday 3 May at the Onda UNED networks, Badilla and
Quesada raised the need to guarantee all Costa Ricans (or those who have regular migratory
status) over the age of 18 a monthly income of ₡300,000 without any conditions whatsoever.
This, they said, would mitigate the effects of the job losses that will inevitably result from the
automation of various tasks, estimated to reach 14 million in the next five years.

A basic income of ₡300,000 for everyone in the country would eliminate extreme poverty and reduce poverty, experts say.

Let the machines work!

According to the World Economic Forum’s report “The Future of Jobs 2023”, in the next five years
the world could see the loss of some 83 million jobs and the simultaneous creation of some 69
million jobs, creating a shortfall of 14 million jobs.

While the paper details that the automation of operations is proceeding at a slower pace than
previously thought, it does predict that by 2027 task automation levels will reach 42% in business
tasks and up to 65% in information and data analysis processes, with artificial intelligence being a
key driver for this shift.

For Badilla, it is clear that the implementation of technology solutions will generate more economic
growth as robots “don’t get sick, don’t get pregnant and don’t go on strike”. Therefore, in addition to
the loss of jobs, it is foreseeable that greater inequality will be generated.
“But then you are saying that the nature of human beings is not related to work and so, well, let the
machines work,” said Lara.

Badilla then acknowledged that the proposal implies a paradigm shift, although he did not rule out
that work would continue to be relevant, while Quesada indicated that the proposal does indeed
include the postulate that “machines should work” and stressed that in the meantime, human
beings would have time to innovate, create and live better.

Badilla also reiterated that the application of the RBU promotes innovation, creativity and health, as
has been demonstrated in experiments in other countries (see box): From Canada to Finland:
Basic Income experiments have initial results that favour human wellbeing).
In addition, there are improvements in the fulfilment of labour rights, as people do not have hunger
as a “driver” to accept jobs with abusive conditions.

It is precisely in the context of the elimination of jobs – which will happen with or without the RBU –
that scholars see the urgency of a sufficient – enough to live on – and stable income, which would
eliminate extreme poverty and significantly reduce poverty.

Sufficient and unconditional income

If this proposal were implemented, each Costa Rican adult or person who has regular migration
status in the country, regardless of their employment or economic status, would receive a monthly
amount of approximately ₡300,000 (about $500).

“For it to have the desired effects, the amount of the RBU must be sufficient, so it is estimated at
around ₡300,000, although it could be more, and it must be accompanied by a progressive fiscal
policy that allows a rate of return among the most privileged sectors,” Badilla detailed, adding that
the amount should be automatically reduced by social charges.

Thus, around 5 million people would receive this amount from the state, which would represent a
monthly expenditure of around ₡1.5 billion (around 3.22% of GDP).

Badilla acknowledged the importance of the weight of this item, while comparing it with the current
tax expenditure (5.57% of GDP), tax fraud (8.2%) and fiscal deficit (9.3%).

In addition, he detailed that there are various sources of financing that could be explored to pay for
the RBU, including the application of high progressive taxes, the use of “free” state resources,
taxes on financial transactions, regulation (and consequent taxation) of the drug market and the
creation of taxes on the use of robots in companies.

Lara questioned the “progressivity” of the delivery of the RBU to all people “even if they were
millionaires”, but Quesada and Badilla explained that the proposal is a radical transformation that
guarantees the right to exist through this income and, therefore, it should be given to all people.
Moreover, they said, its universality would prevent the politicisation of delivery.

Badilla added that, in addition, the very application of the measure implies economic growth, as
there are more resources for the purchase of goods and services, so that the market would remain
more active, generating greater wellbeing for all people, as demonstrated by the research
“Modelling the macroeconomic effects of a universal basic income” carried out in the United

From Canada to Finland: Experiments have initial results that favour human wellbeing

In recent years countries such as Norway, Germany, Finland and Canada have discussed the
possibility of implementing the measure and have conducted small-scale experiments to measure
its effects. If in most cases it is not a universal, state-paid income, the experiences with a sufficient
and stable income allow some conclusions to be drawn.

In Canada, specifically in Manitoba, the first trial was conducted between 1974 and 1979, giving
subscribing families a monthly amount. The study concluded that there were benefits in physical
and mental health as well as significant improvements in school performance. This project and
others like it, however, were cancelled years ago with the rise of conservative sectors to power.

In Alaska, the model is not one of basic income, but rather each person is given between $1,000
and $2,000 a year. The result has been, according to its rulers, that most people use the income to
improve their living conditions, not to stop working.

In Germany the project was born in 2014 when an NGO set about raising funds to pay around
$1,000 to some 500 families. According to Fast Company magazine a huge majority of the
beneficiaries said that during the period they received the amount they became “more curious, less
anxious and ready to reimagine what work could be”.

In addition, 80 per cent said the income reduced their stress, more than half said it was a boost to
pay for their education and 35 per cent said they felt more motivated to work.

Meanwhile, the country where the RBU has been most discussed – Finland – since 2017 conducted
an experiment providing unemployed people with a stipend. The results, according to the Nordic
government, were fewer symptoms of stress, less difficulty concentrating, fewer health problems,
greater confidence in the future and positive effects on various social problems.

Redacción Costa Rica